Express Trusts Flashcards
Express Trusts
What is an express trust? How can it be done legally?
An express trust is a means X can make a gift of property to Z (beneficiary) via Y (trustee) or can declare himself as trustee for Z. Must be done legally: (1) Inter vivos (s.4 Statute of Frauds) (2) Death: Will (SA 1965)
Express Trusts - The Three Certainties
Chambers v Fahy [1931]
O’Byrne J said for an express trust to be created – the three certainties:
- The subject matter must be certain,
- The objects of the trust must be certain and
- The words relied on must be imperative to show the testator intends to create an obligation
Express Trusts - The Certainty of Intention
How is this certainty constituted?
Not necessary to use the word ‘trust’ or particular words. Equity looks at intent rather than form. The test is whether it’s a gift to the done or did the testator intend the done hold it on trust for others?
Express Trusts - The Certainty of Intention
Thexton v Thexton [2001
Doesn’t need technical form of expression: it’s a Q of construction of the facts.
Express Trusts - The Certainty of Intention - Imperative v Precatory Words
What is the distinction between these forms of words?
Courts draw distinction bw precatory + imperative words: Precatory express desire/hope/wish. Imperative are forceful: require something be done. Traditionally, precatory capable of disclosing certainty of intention
Express Trusts - The Certainty of Intention - Imperative v Precatory Words
Nowlan v Nelligan [1875]
- T left property to wife: ‘I request her to take care of + manage my daughter’. Held suff to create an ET, no longer the case post the 1870’s,
Express Trusts - The Certainty of Intention - Imperative v Precatory Words
Re Humphrey’s Estate [1916]
- Testator devised all his property to his wife: he ‘wished she would give a house to his son and the remaining property to his daughter’s. No express trust: Held wife took an absolute interest.
Express Trusts - The Certainty of Intention - Imperative v Precatory Words
Re Coulson [1953]
- Testatrix left farm + farmhouse furnishings to cousin in her will. State her wish was that the prop be neither divided/sold, rather she wished that her cousin retain it for whichever of her kids she saw fit
- Dixon J held the Q was ‘what could be gathered from the will as a whole?’
- Held she had merely expressed a hope that the property be dealt with in a certain manner: No ET.
Express Trusts - The Certainty of Intention - Imperative v Precatory Words
Re Sweeney [1977] Most recent Irish case
- Testator left all his property to his wife for her own absolute use and benefit ‘subject to the express wish’ that she’d make provision for payment of certain legacies after her death.
- Held T merely expressed a wish for the guidance of his wife on her death: No ET.
Express Trusts - The Certainty of Intention
What is the effect of a lack of certainty of intention?
The disposition operates as a gift to the alleged trustee / donee.
Express Trusts - The Certainty of Subject Matter
What is this?
The trust property must have been identified/readily identifiable: trustee must know what property it is
Express Trusts - The Certainty of Subject Matter
Sprange v Barnard [1789]
- T left sum of money to husband ‘and at his death the remaining part of what’s left and what he doesn’t want’ is to be divided equally between my brother and sister. Held no certainty of subject matter.
Express Trusts - The Certainty of Subject Matter
Palmer v Simmonds [1854]:
T left ‘the bulk of my residuary estate’. Held too vague: no certainty of SM
Express Trusts - The Certainty of Subject Matter
Re Golay’s Will Trusts [1965]
- T instructed his executors to allow a beneficiary ‘to enjoy one of my flats during her lifetime and to receive a reasonable income from my other properties’.
- Held there was certainty of SM as the executors could choose the flat and ‘reasonable income’ was sufficiently objective to allow the court to quantify the amount.
Express Trusts - The Certainty of Subject Matter - Definite but unidentified portion of assets?
Re Goldcorp Exchange Ltd [1995]
- Gold dealer went into receivership. Clients claimed entitled to stock bc of contracts that created trusts
- Held clients that could claim identifiable stock that’d been segregated from the rest + bought specifically for them had established a trust as the subject matter was certain.
- No trust available for those who bought gold for future delivery but given no specific portion.
- If the purported SM comprises of goods/chattels, must be properly segregated to give certainty of SM
Express Trusts - The Certainty of Subject Matter - Definite but unidentified portion of assets?
Hunter v Moss [1993]
Used to be thought trust of intangible prop only valid if declared trust over entire interest in the prop:
- Settlor declared trust over 5% of shares in co. Held no need to separate the shares before declaring the trust as long as all same class. All distinguishable from each other, so equally capable of satisfying it
Express Trusts - The Certainty of Subject Matter - Definite but unidentified portion of assets?
Re London Wine Co [1986]
- Wine in warehouse not segregated from rest of stock. Held no trust could arise.
Goldcorp and London Wine are different as they concern tangible property: must be identified.
Express Trusts - The Certainty of Subject Matter
What is the effect of a lack of certainty as to subject matter?
Disposition operates as a gift to the alleged trustee/donee
Express Trusts - Certainty of Objects (Beneficiaries) - Fixed Trust
What is a fixed trust?
A trust is fixed if the extent of each beneficiary’s interest in the property is fixed in the trust instrument. For there to be certainty of objects w FTs, it must be possible to compile a complete list of the beneficiaries
Re Endacott [1960]: Set out this “complete-list test”.
Express Trusts - Certainty of Objects (Beneficiaries) - Discretionary Trust
When does this occur?
A discretionary trust exists if trustees have discretion on (i) who will benefit + (ii) the extent they’ll benefit.
Express Trusts - Certainty of Objects (Beneficiaries) - Discretionary Trust
IRC v Broadway Cottages Trust [1955] UK
- A trust for members of a given class as the trustees will select is void for uncertainty unless the whole range of objects eligible is ascertained/capable of ascertainment: the “complete-list test”. Overturned in McPhail v Doulton [1971] (individual ascertainability test), but McPhail not followed in Ire
Express Trusts - Certainty of Objects (Beneficiaries) - Discretionary Trust
Re Parker [1966] Ireland
- An discretionary trust is invalid unless the whole class of potential beneficiaries can be ascertained.
Express Trusts - Certainty of Objects (Beneficiaries) - Discretionary Trust
O’Byrne v Davoren [1994]
Approved Re Parker. thus, for there to be certainty of objects it must be possible to compile a complete list of beneficiaries
Express Trusts - Certainty of Objects (Beneficiaries) - Conceptual and Evidentiary Certainty
Re Baden’s Deed Trusts (No 2) [1973]
The class of beneficiaries must be conceptually certain: - Held once the class of people to benefit is conceptually certain, then it becomes a Q of fact as to whether individuals fall within a class. Held ‘relatives’ was a conceptually certain class
Martin (2005) suggests, where there’s a broad class of potential beneficiaries, such trusts should if possible be upheld and in the context of “relatives” suggests that trustees can be expected to act sensibly and not choose the most obscure and distant relative as a beneficiary ahead of closer family members.
Express Trusts - Certainty of Objects (Beneficiaries) - Administrative Unworkability
McPhail v Doulton [1971]
Even if a trust is conceptually certain, it may still fail if it’s administratively uncertain
- HOL said it may fail for uncertainty if the definition of beneficiaries is so hopelessly wide as to not form anything like a class + is thus admin unworkable. ‘All residents of Greater London’ – admin unw
Express Trusts - Certainty of Objects (Beneficiaries) - Administrative Unworkability
Re Hay’s Settlement Trusts [1982]:
A mere power will not however be void on this basis:
Admin unworkable didn’t apply as due to the diff in nature bw powers
and trusts, mere numbers couldn’t prevent the holder of a power from deciding to exercise a power or not
Express Trusts - Certainty of Objects (Beneficiaries) - Capriciousness
Describe this?
Trust require trustees to exercise certain fiduciary duties, so if the terms of the trust are so capricious it may be v difficult for the trustees to carry out those duties.
Express Trusts - Certainty of Objects (Beneficiaries) - Capriciousness
Re Manisty’s Settlement [1974]:
- Held what was required was that trustees could engage in a sensible consideration of how the power/trust was to be exercised. Absolute discretion didn’t mean the terms were capricious as long as there was a sensible basis on which the trustees could exercise their power
Martin says from case law, it’s evident ‘admin unworkability’ and ‘capriciousness’ are 2 separate concepts
Express Trusts - Certainty of Objects (Beneficiaries) - Capriciousness
R v District Auditor ex p West Yorkshire MCC [1986]:
A trust for the benefit of ‘any or all or some of the inhabitants of W York held void for admin unw, but not capr: the settlor (local auth) had every reason to
wish to benefit the inhabitants in the ways specified.
Express Trusts - Certainty of Objects (Beneficiaries)
What is the effect of a lack of certainty of objects?
A resulting trust arises in favour of the settlor or if dead, estate
The Perfection of Gifts and Complete Constitution of Trusts
When is an express trust completely constituted?
An express trust is completely constituted when either:
(1) The trust property is transferred to a trustee in the way the law requires to make him owner of it or
(2) The settler declares himself as a trustee of his own property
Until transfer or declaration, trust is incompletely constituted. Equity won’t enforce or perfect an IC
trust in favour of a volunteer (someone who’s give no consideration for a transaction).
The Perfection of Gifts and Complete Constitution of Trusts
Milroy v Lord [1862] Principle re complete constitution
- Principle: To render a voluntary settlement valid, the settlor must’ve done everything which, according to the nature of the property in the settlement, was necessary to be done to transfer the property and render the settlement binding on them. How can a settlor ensure compliance with this?
- (1) Transfer property to beneficiary (2) Transfer property to trustee or (3) Declare himself a trustee.
The Perfection of Gifts and Complete Constitution of Trusts - Transfer
How can transfer occur?
(a) Death: If the settlor/donor wants to make the donee/trustee owner on his death, he must do so by will.
(b) Inter vivos: If inter vivos, transfer of real property requires something to be in writing e.g. a conveyance
and transfer of personal prop requires mere delivery.
The Perfection of Gifts and Complete Constitution of Trusts - Declaration
How does this work?
Settlor can declare himself trustee of own property for Z as he already owns it. Due to obligations on trustees, court requires cogent evidence it was his intention to declare he holds his own property on trust:
The Perfection of Gifts and Complete Constitution of Trusts - Declaration
Re Cozens [1913]:
Where a declaration of trust is relied on, the court must be satisfied that a present
irrevocable declaration of trust has been made.
The Perfection of Gifts and Complete Constitution of Trusts - Declaration - Ineffective Gift
Milroy v Lord [1862]
- If settlement is intended to take effect by transfer, court won’t hold it to operate as a declaration of trust because then every imperfect instrument would be made effectual.
McArdle v O’Donohoe [1999]: Endorsed by Irish HC
The Perfection of Gifts and Complete Constitution of Trusts - Declaration - Ineffective Gift
Jones v Lock [1865]
- Deceased wrote cheque payable to himself. Gave it to baby son. Put in safe so baby didn’t tear up.
- Cheque wasn’t endorsed: Court noted there was an intention to make a gift which was imperfect as the cheque wasn’t endorsed. Court refused to perfect an imperfect gift by saying it was a declaration of him holding on trust for the baby: No trust intended.
The Perfection of Gifts and Complete Constitution of Trusts - Declaration - Ineffective Gift
Richards v Delbridge [1874]
- Deceased wanted to transfer business to infant grandson. Signed transfer lease “I give to…” + gave to grandson’s mother but died before it was delivered to the grandson
- Held acts insufficient to assign lease + couldn’t be interpreted as declaration of trust: words used were words of present gift and not trust.
The Perfection of Gifts and Complete Constitution of Trusts - Declaration - Ineffective Gift
Paul v Constance [1977] More flexible approach
- Injured at work, got £950, money in acc in sole name but expressed wish to put money in joint acc w P (cohabitee) but told not to: embarrass P, not married. Made statements ‘moneys urs as much as mine’
- Separated from wife so on death she claimed the £950. Held the statements were sufficient to show D intended a trust relationship despite difficulty in stating exact moment trust declared.
The Perfection of Gifts and Complete Constitution of Trusts - Declaration - Ineffective Gift
T Choithram International v Pagarani [2001]
- Rich business man wanted to set up charitable foundation. Executed deed appoint 7 trustees. He was one. Told accountant to transfer assets to trustees but died before done.
- Held the trust as incomp constituted + unenforceable (language of gift, IC), however, as the settlor was one of the trustees, his statement could be construed as declaring that he held the property on trust for the foundation: no difference bw settlor declaring himself sole trustee or one of several.
Exceptions to the General Principle in Milroy v Lord - Re Rose
Describe this exception?
Where the settlor/donor is unable to do everything that’s necessary to complete the transfer due to circs beyond their control, the principle may be qualified. Usually in shares (no register, transfer incomplete):
Exceptions to the General Principle in Milroy v Lord - Re Rose
Re Rose [1952]
- S executed voluntary deed to transfer shares in a co. Died before transfer registered (transfer incompl)
- Held settlor did everything in his powers to divest himself of shares. Trust validly constituted.
Exceptions to the General Principle in Milroy v Lord - Re Rose
Pennington v Waine [2002]
- Deceased intended to transfer shares to her nephew+make him a director. Signed transfer form.
- Co auditors never passed it on. Valid transfer? Held it was effective when deceased signed the share transfer form. Held intention was clear and it’d be unconscionable to recall it.
Exceptions to the General Principle in Milroy v Lord - Strong v Bird
Strong v Bird [1874]
- D borrowed 1k from stepmom who lived w him + paid rent of 200 every 3mths. Agreed he’d repay her
- D charged her £100 less rent to repay, but she then expressly forgave the debt + paid full rent again
- When she died, he was appointed the executor of her will. The residuary legatees sought to enforce the £900 debt. Court held the debt was released because:
(i) The deceased had appointed the defendant as her executor and
(ii) The deceased had intended to make an immediate gift of the property (i.e. the amount of the debt) to D and such intention was continued until the deceased’s death. - The gift is perfected because the donee obtains legal title to the donor’s property in the donee’s capacity as executor or administrator.
- Significance: The claims of beneficiaries under the will are displaced by the donee’s prior equity.
Exceptions to the General Principle in Milroy v Lord - Strong v Bird
Re Stewart [1908]
- Neville J explained the reasoning behind the rule as: (1) the vesting of the property in the executor at T’s death completes an imperfect gift and (2) the intention of the T to give beneficial interest is suff to countervail the equity of beneficiaries under the will as T vested legal estate in the executor.
The rule applies to real property too.
Exceptions to the General Principle in Milroy v Lord - Strong v Bird - Donee must have been appointed as a personal representative of the deceased
Re James [1935]:
Held the rule applies also where there’s no or a defective will so that administrators have to be appointed.
Exceptions to the General Principle in Milroy v Lord - Strong v Bird - Donee must have been appointed as a personal representative of the deceased
Re Stewart [1908]:
It does not matter whether the donee is one or one of several personal reps
Exceptions to the General Principle in Milroy v Lord - Strong v Bird - Deceased must’ve intended to make an immediate gift + intention continued until their death
Re Wilson [1933]:
Deceased intended immediate gift of prop to son but not perfected in D’s lifetime, however son was executor of will. Held intention proved + rule perfected the gift. However, the rule did not apply to properties. That were to be transferred in the future
Exceptions to the General Principle in Milroy v Lord - Strong v Bird - Deceased must’ve intended to make an immediate gift + intention continued until their death
Re Freeland [1952]:
An intention to make a gift in the future won’t come within the rule.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa
Describe a DMC
Biehler: Donatio mortis causa is the delivery of property to a donee in contemplation of the donor’s death which is conditional on this event occurring. A DMC has a number of essential elements.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa
Bentham v Potterton [1998]
Barr J set out the three essential elements for a donatio mortis causa:
(1) It must be made in contemplation of the donor’s death;
(2) It must be made subject to condition that it’ll only become indefeasible in event of donor’s death; and
(3) The property must be delivered to the donee
Courts insist on strict compliance w 3 criteria before enforcing a gift by DMC. Onus on person claiming DMC
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Manner of Death Irrelevant
Wilkes v Allington [1931]
- The donor, in contemplation of dying from cancer, made a gift. He later died from pneumonia.
- The manner in which he did was held not to affect the validity of the DMC
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Manner of Death Irrelevant
Mills v Shields [1948]:
Irrelevant that he had died by suicide provided death was contemplated otherwise
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Type of Property Capable of forming subject matter of DMC
Sen v Headley [1991] UK
Traditionally, real property couldn’t form the subject-matter of a DMC. View set aside in this case.
- P + deceased lived together for 10 yrs. On death bed, said ‘the house is yours, the keys are in your bag, the deeds are in the steel box’. D died intestate. P claimed DMC. Held DMC despite fact real property
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Type of Property Capable of forming subject matter of DMC
Valle v Birchwood [2012] UK
- Valid DMC of land made even where donor retained physical possession for some time. Delivery of title deeds + keys by dad to daughter in contemplation of death was sufficient delivery of dominion.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Gift made in contemplation of donor’s death
Cain v Moon [1896]:
Must’ve been made in contemplation, though not necessarily in expectation, of death
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Gift made in contemplation of donor’s death
Bentham v Potterton [1998]
- Unclear deceased had realised the seriousness of her condition when the ‘words of gift’ were spoken
- Although elderly, no evidence she’d been told her condition was terminal + only weeks after words said that she told her grandniece she thought she was dying. Made clear onus is on person claiming.
- Held it hadn’t been established on the balance of prob that the gift was made in contempl of her death
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Gift made in contemplation of donor’s death
Agnew v Belfast Banking [1896]:
Gift in contemplation of suicide not DMC but may be different since s.2
Criminal Law Suicide Act 1993 decriminalised suicide.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - Must have been mad esubject to a condition it only became irrevocable in event of the donor’s death
Agnew v Belfast Banking [1896]
DMC is incomplete until death + depends on it. If sick man recovers,
it’s of no avail. Property doesn’t pass until death.
DMC revoked if (1) donor recovers (2) donor says so (3) donor recovers dominion over the property.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - The Property Must be Delivered to the Donee - Real Property
Sen v Headley [1991]
- Lived together 10 years, death bed, ‘house is yours, keys are in your bag, deeds are in the steel box’
- Held delivery of the deeds constituted delivery of the house. The fact he’d kept the keys to the house that he knew he’d never return to didn’t amount to retention of dominion.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - The Property Must be Delivered to the Donee - Real Property
Valle v Birchwood [2012]:
- Valid DMC of land made even where donor retained physical possession for some time. Delivery of
title deeds + keys by dad to daughter in contemplation of death was sufficient delivery of dominion.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - The Property Must be Delivered to the Donee - Personal Property
Rule?
Biehler: If the subject matter is chattel, there must be delivery of the chattel itself or of something that will enable the donee to obtain effective control over it. So, delivery of a key to a safe is sufficient.
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - The Property Must be Delivered to the Donee - Personal Property
Re Mulroy [1924]
- Deceased opened cash box in presence of D with 2 cheques + said ‘sorry ive no more to give’
- Held no DMC as he put them back, locked the box and kept the key: didn’t relinquish dominion
Exceptions to the General Principle in Milroy v Lord - Donatio Mortis Causa - The Property Must be Delivered to the Donee - Personal Property
Keeling v Keeling [2017]
- Dismissed claim by brother of deceased widow that she’d made a DMC of her house to him+wife
- Inconsistencies in evidence + the purported gift was made 6 months before her death
- Also evidence she lacked capacity + hadn’t told anyone about the gift
